Just download CSI FP2 Exam Questions and start FP2 exam preparation right now. The CSI FP2 PDF Dumps exam syllabus is updated from time to time. If you want to pass the Financial Planning II (FPII) exam then you have to understand these changes.
| Section | Weight | Objectives |
|---|---|---|
| Investment and Tax Planning | 10% | - Investment Management
|
| Financial Planning Practice | 10% | - The Personal Financial Planning Process in Canada
|
| Retirement Planning | 20% | - Registered Pension and Retirement Income Plans
|
| Savings Planning and Debt Management | 10% | - Debt Planning and Mortgages
|
| Insurance Planning | 10% | - Disability and Health Insurance
|
| Family Law | 15% | - Fundamental Aspects of Family Law
|
| Financial Planning for Small Business | 15% | - Business Law and Agency Relationships
|
| Estate Planning | 10% | - Estate Distribution and Tax Planning
|
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NEW QUESTION # 58
What is the tax treatment on disability assistance payments for Registered Disability Savings Plans?
Answer: A
Explanation:
A Disability Assistance Payment from an RDSP contains both potentially taxable and non-taxable components.
The beneficiary's own private contributions were made with after-tax funds and are therefore not taxed again when returned. However, the portion of a payment representing Canada Disability Savings Grants, Canada Disability Savings Bonds, investment income earned within the plan, and specified rollover proceeds is included in the beneficiary's income when paid from the RDSP. CRA confirms this treatment expressly.
Option A is therefore the best available answer. Its reference to the "grant and income earned portions" captures the central distinction tested by the question, although the complete current rule also encompasses bonds and taxable rollover amounts.
Option B is incorrect because the entire withdrawal is not taxable; the portion attributable to private contributions is returned tax-free. Option C incorrectly treats all withdrawals as tax-free. Option D is also inaccurate as a general tax characterization. CRA specifically provides that the taxable RDSP portion is excluded from income when calculating several federal income-tested benefits and credits.
The RDSP therefore combines non-deductible contributions with tax-deferred investment growth and government assistance, with taxable amounts recognized when qualifying payments are made.
FPII reference/topic: Investment and Tax Planning - RDSPs; Disability Assistance Payments; grants, bonds and investment income; taxation of withdrawals.
NEW QUESTION # 59
A Canadian resident, age 57, is self-employed and earns $74,000 in yearly income. The year's basic exemption and maximum pensionable earnings are $3,500 and $61,600, respectively. Assuming a contributory rate of 5.45%, how much will the resident pay in Canada Pension Plan premiums (rounded to the nearest dollar)?
Answer: A
Explanation:
Because the individual is self-employed, both the employee and employer portions of the CPP contribution must be paid. Although the stated employee contributory rate is 5.45%, the effective self-employed rate is therefore:
5.45% ร 2 = 10.90%
Income above the Year's Maximum Pensionable Earnings does not attract ordinary CPP contributions.
Pensionable earnings are therefore limited to $61,600. The Year's Basic Exemption must then be deducted:
$61,600 # $3,500 = $58,100
Apply the self-employed rate:
$58,100 ร 10.90% = $6,332.90
Rounded to the nearest dollar:
$6,333
Therefore, option A is correct.
The figures in the question correspond to the 2021 CPP parameters. Official federal figures confirm a 2021 YMPE of $61,600, basic exemption of $3,500, employee/employer rate of 5.45% each, and maximum self- employed contribution of $6,332.90.
This question demonstrates an essential distinction between employees and self-employed individuals: an employee pays only the employee share, whereas a self-employed person effectively bears both sides of the CPP contribution.
FPII reference/topic: Retirement Planning - Canada Pension Plan; YMPE; Year's Basic Exemption; self- employed CPP contributions.
NEW QUESTION # 60
Sarah would like to add another stock holding to her portfolio. She is researching the financial condition of different companies and trying to determine their potential for future growth. What type of approach is Sarah taking when reviewing these companies?
Answer: B
Explanation:
Sarah is applying fundamental analysis because she is evaluating companies' financial condition and their prospective ability to grow.
Fundamental analysis examines the underlying economic characteristics of an issuer. Typical factors include revenue growth, earnings, cash flow, profitability ratios, debt levels, competitive position, management quality, industry conditions, economic outlook, and valuation measures. The purpose is to estimate the company's intrinsic value and compare it with the current market price.
Technical analysis takes a fundamentally different approach. It studies market-generated information such as historical prices, volume, chart formations, momentum, and trading patterns rather than concentrating principally on a company's underlying financial performance.
A passive investment strategy generally seeks to replicate a market index or predetermined asset class rather than select individual companies through detailed security analysis. Tactical asset allocation involves actively changing the portfolio's allocation among broad asset classes based on shorter-term market expectations.
Neither describes Sarah's company-by-company investigation.
Because Sarah is explicitly researching companies' financial condition and future growth potential, her analysis concerns the economic fundamentals that support future earnings and valuation.
FPII reference/topic: Investment and Tax Planning - security analysis; fundamental analysis; financial statements; growth prospects and intrinsic value.
NEW QUESTION # 61
Tara bought an insurance policy on Wednesday, June 6. What date would her rescission right end?
Answer: A
Explanation:
Life insurance policies generally provide a 10-day rescission or "free-look" period after the policy is received.
During this period, the policyholder can review the contract and cancel it without the ordinary consequences associated with surrendering an established policy.
Canadian consumer guidance describes the standard life-insurance free-look period as usually 10 days, while some policies provide a longer period. Ontario's financial-services regulator similarly states that life-insurance consumers must generally be given at least 10 days, and in certain cases 20 days, to reconsider the purchase.
Using the 10-day period specified by the examination framework and counting ten days after Wednesday, June 6, the period ends on Saturday, June 16.
The rescission right differs from ordinary cancellation or surrender after the free-look period. During rescission, the policyholder is normally entitled to have the contract unwound and premiums refunded according to the governing policy and applicable law.
Therefore, of the dates presented, Saturday, June 16 is correct.
FPII reference/topic: Insurance Planning - insurance contracts; policy delivery; rescission rights; free-look period; consumer protection.
NEW QUESTION # 62
What is the primary difference between a Life Income Fund (LIF) and a Registered Retirement Income Fund (RRIF)?
Answer: C
Explanation:
Both a RRIF and a LIF provide retirement income and are subject to prescribed minimum annual withdrawals. The distinguishing feature of a LIF is that it contains pension money that remains subject to locking-in legislation. Consequently, in addition to the minimum required withdrawal, the amount that may normally be withdrawn from a LIF is subject to an annual maximum.
The Office of the Superintendent of Financial Institutions confirms that federally regulated LIFs have minimum and maximum annual withdrawal limits. The minimum is governed by income-tax rules, while pension standards legislation determines the maximum.
A conventional RRIF does not impose this pension-based maximum withdrawal limit. Once the required minimum has been taken, the annuitant may generally withdraw additional amounts, although those amounts remain taxable.
Option A is incorrect because there is no universal rule requiring all LIF holders to purchase a life annuity at age 80. Option B incorrectly describes the permitted source of LIF assets; LIFs are primarily funded from locked-in pension arrangements, not simply retirement compensation arrangements. Option D is also incorrect because taxable RRIF withdrawals do not become tax-free merely because they represent the prescribed minimum.
FPII reference/topic: Retirement Planning - RRIFs; LIFs; locked-in pension assets; minimum and maximum retirement withdrawals.
NEW QUESTION # 63
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